We've been following Twitter for a few years now, and (as with nearly all businesses) we really want to see it succeed.
But they’re in a bad place right now; perhaps a worse place than ever before, without a clear path to recovery.
So the Q4 2015 results were released this week, to a reception that was overwhelmingly negative. Why?
Was revenue down? No. Had the losses increased? No.
It was all about users. Twitter has 320 million monthly active users, exactly the same number as the previous quarter.
Significantly, this was the first quarter where user numbers hadn’t grown and despite the overall stagnation, Twitter reportedly lost 1m users in its home country of the USA.
The results actually had positive elements to them, such as a 48% increase in revenue compared to the same quarter in 2014 and losses were down from $125m to $90m for the same three months last year.
So, financially, things have improved. But the market seemed to largely ignore this, as the overall user numbers are clearly more indicative of future earnings.
Shares fell by 10% upon release of the results, then recovered to an overall loss of 3%. Doesn’t sound like much, but when your market cap is around $9.8 billion, it’s kind of a big deal.
Senior team issues
Twitter seems to have serious issues with retaining its executives and senior members of staff.
Most recently, it was leaked that four senior staff were all going to be leaving simultaneously.
They were senior vice-president of engineering Alex Roetter, vice-president of global media Katie Jacobs Stanton, HR vice-president Skip Schipper and senior vice-president of product Kevin Weil.
CEO Jack Dorsey (more on him later) quickly moved to release a statement claiming that all four had decided to leave, and thanking them for their contributions to the business. But really, what are the chances of all four deciding to leave at exactly the same time, all for differing reasons? Hmm.
These four are only one small part of the executive departure, however. TechCrunch wrote an article that detailed some of the other departures over the last couple of years.
I’d say there is not only a user retention problem at Twitter, but an executive one too.
What is Twitter anyway?
I think one of the other problems facing Twitter is that of an identity crisis.
It’s clear from recent communications that even the leadership of the company aren’t sure what the product should actually be.
I’m sure they have a vision for the business, but I don’t think they’re clear on how to get there. If they are, they need to stop ‘suggesting’ things and actually execute on the roadmap. Get it done. At least that way the rest of the world could be convinced that the business actually knows what it’s doing and why.
In terms of specific product changes, Twitter is considering changing it’s historic 140 character limit in favour of…10,000 characters. That reverse chronological timeline might be going too.
But more importantly, Twitter (unlike Facebook) doesn’t seem to have been able to cement itself as an absolute necessity in the lives of most people.
I think this comes down to both the sense of social connection and the time taken to deliver value.
On Facebook, you’re connected instantly with friends and family, and can feel like you’re close to and can share with them in no time at all. Instant value.
On Twitter, you’re instantly stuck in a dark space of uncertainly, having no followers and just sending small messages into the abyss for a few weeks. Even then, what you can see and share seems so much more limited than on Facebook.
Perhaps it’s not fair to compare the two, but I feel the example that Facebook sets of delivering instant value and connection is not something to lose sight of as a social network.
I think Twitter is also one of the easiest social networks to ‘leave’. Leaving Facebook, Instagram or LinkedIn, for example, has the potential to be a much more painful process as there is far more to lose (memories and professional opportunities).
Recent changes have also been taking Twitter either closer to Facebook or LinkedIn, but I’m not sure those spaces are ones where Twitter will succeed at all. Competition is certainly stiff.
What about Jack?
So where does Jack Dorsey fit in all this? As CEO, he’s got to take responsibility for the business, but one can hardly help but muse over how much of the problems are actually his own.
You don’t have to dig too deep to find some fascinating stories into the history of Twitter, and more importantly into Jack.
Factors to consider; he’s the CEO of two very demanding businesses, he was fired as CEO of Twitter, then (reportedly) launched a rumour campaign to get himself back in.
He’s also reported to be a controlling micromanager with an obsession for detail, often criticised for perhaps trying too hard to style himself after Steve Jobs.
With all that said, however, he’s clearly an extremely talented and gifted individual. He founded Square, has been CEO of Twitter twice and is most certainly powerful visionary.
Can he put all of this mess right, however? Does he need to replace himself?
Sacca still believes
On another note, one of the most respected seed and Series A investors in Silicon Valley, Chris Sacca, still firmly believes in Twitter.
He’s a keen user of the platform and often talks about the product, business and staff in very favourable terms.
Chris Sacca’s opinion isn’t one to be taken lightly at all, but I do sometimes wonder whether his views are in any way skewed by his own admissions that both he (personally) and his fund (Lowercase Capital) own very significant amounts of Twitter stock.
My questions: is he leveraging his reputation to boost everyone else’s belief (and to some extent the valuation) and would he think differently about Twitter prospects if he owned no stock at all?
Twitter isn’t an easy nut to crack as a product, and with overall value falling by 53% since Jack Dorsey regained control, it’s not a great outlook right now.
What will become of it? Well, Jack could take the risk of forcing through a new product roadmap, with a new team, regardless of user opinion. I think it’s more likely, however, that we will see an acquisition of Twitter. A major player could buy Twitter, install new leadership and effective integrate a modified product into their own existing portfolio. Jack could even then focus entirely on Sqaure…
If the stock keeps falling, keep your eyes peeled.